Saturday, December 27, 2008

Digging Me Some DUG

I traded DUG back when oil was at the bubble with some success. DUG is a weird one for sure, and I learned early from trading the name that its success was more correlated to the the weakness in XOM and CVX than what the actual price of crude was doing. Many days I made money in DUG even though crude was rallying higher. Why? Well, XOM and CVX were getting crushed for whatever reason. So I took a look at CVX and XOM and I think both charts could have problems going forward so I will have DUG on my radar.

5 comments:

DF said...

Also consider ERY, complete agreement w your analysis on CVX & XOM, a the weeklies are showing institutional distribution:

CVX-
http://stockcharts.com/h-sc/ui?s=CVX&p=W&yr=2&mn=0&dy=0&id=p61485247734&a=154515305

XOM-http://stockcharts.com/h-sc/ui?s=XOM&p=W&yr=3&mn=0&dy=0&id=p46400112134&a=154091377

Bob Brill said...

Thx for sharing insights and comments with marked charts. Also, I clicked an ad :-)

WhipsawEd said...

I share your thoughts on DUG. On the Daily, the ATR and the Bollinger Bands are compressing and the MACD appears to be bottoming and diverging. I think we drift back and form a base in the 23-25 area and then head up from there.

As I posted over on SOH, the fundamentals for the oil exploration/service companies are negative. Earnings are projected on $70+ oil prices, and despite what the pollyannas say, we ain't getting back there soon:

http://tinyurl.com/9unubp

We're going to draw Y-O-Y and quarterly comparisons against all-time record earnings for many of these companies. Operating costs are not coming down quickly, margins are getting squeezed, and new projects are being scrapped:

http://tinyurl.com/9wetwc
http://tinyurl.com/5ngy4e

Man, I look at the long-term weekly chart of XOM and see a beautiful topping pattern.

upsidetrader said...

whipsaw ed

thoughtful analysis, i concur

John said...

Long DIF from 24.80 area, mainly on sentiment. All I heard and read was that oil was going to 25 if not 10 dollars a barrel. Just like when oil was 140 , everyone screamed 200. In it for a trade.

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I am a former hedge fund manager, broker and capital markets dude who now trades for his own account. I love what I do. I will try to post some stocks and an occasional chart that looks attractive for entry.I will also try to point out the idiocy of conventional wisdom and the lack of value added by the mainstream financial media. These postings should not be viewed as recommendations.